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Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?

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  • Mr. Serhan Cevik

Abstract

The coronavirus pandemic is a global crisis like no other in modern times, and there is a growing apprehension about handling potentially contaminated cash. This paper is the first empirical attempt in the literature to investigate whether the risk of infectious diseases affects demand for physical cash. Since the intensity of cash use may influence the spread of infectious diseases, this paper utilizes two-stage least squares (2SLS) methodology with instrumental variable (IV) to address omitted variable bias and account for potential endogeneity. The analysis indicates that the spread of infectious diseases lowers demand for physical cash, after controlling for macroeconomic, financial, and technological factors. While the transactional constraints imposed by the COVID-19 pandemic could become a catalyst for the use of digital technologies around the world, electronic payment methods may not be universally available in every country owing to financial and technological bottlenecks.

Suggested Citation

  • Mr. Serhan Cevik, 2020. "Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?," IMF Working Papers 2020/255, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2020/255
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    Cited by:

    1. Suder, Marcin & Gurgul, Henryk & Barbosa, Belem & Machno, Artur & Lach, Łukasz, 2024. "Effectiveness of ATM withdrawal forecasting methods under different market conditions," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    2. Toshitaka Sekine & Toshiaki Shoji & Tsutomu Watanabe, 2022. "Going Cashless: Government’s Point Reward Program vs. COVID-19," CARF F-Series CARF-F-538, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    3. Miloš Milosavljević & Milan Okanović & Slavica Cicvarić Kostić & Marija Jovanović & Milenko Radonić, 2023. "COVID-19 and Behavioral Factors of e-Payment Use: Evidence from Serbia," Sustainability, MDPI, vol. 15(4), pages 1-13, February.
    4. Feruś Anna, 2024. "State and Prospects for Development of the Payment Card Market in Poland," Folia Oeconomica Stetinensia, Sciendo, vol. 24(2), pages 100-124.
    5. Claire Greene & Ellen A. Merry & Joanna Stavins, 2021. "Has COVID Changed Consumer Payment Behavior?," Working Papers 21-12, Federal Reserve Bank of Boston.
    6. Toshitaka Sekine & Toshiaki Shoji & Tsutomu Watanabe, 2021. "Going Cashless: Evidence from Japan’s Point Reward Program," CARF F-Series CARF-F-525, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    7. Serhan Cevik, 2024. "Good Will Hunting: Do Disasters Make Us More Charitable?," Annals of Economics and Finance, Society for AEF, vol. 25(1), pages 275-287, May.
    8. Kotkowski, Radoslaw, 2023. "National culture and the demand for physical money during the first year of the COVID-19 pandemic," Finance Research Letters, Elsevier, vol. 51(C).
    9. Rösl, Gerhard & Seitz, Franz, 2021. "Cash and crises: No surprises by the virus," IMFS Working Paper Series 150, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    10. repec:upd:utmpwp:036 is not listed on IDEAS
    11. Porter, G. & Murphy, E. & Adamu, F. & Dayil, P.B. & De Lannoy, A. & Han, S. & Mansour, H. & Dungey, C. & Ahmad, H. & Maskiti, B. & S, Clark & Van der Weidje, K., 2021. "Women’s mobility and transport in the peripheries of three African cities: Reflecting on early impacts of COVID-19," Transport Policy, Elsevier, vol. 110(C), pages 181-190.
    12. Wishnu Badrawani, 2025. "Digital payment policy impact analysis on the intention to use QRIS (quick response code Indonesian standard) during COVID-19 pandemic," Papers 2506.11695, arXiv.org.
    13. repec:upd:utmpwp:040 is not listed on IDEAS
    14. Marcin Suder & Tomasz Wójtowicz & Rafał Kusa & Henryk Gurgul, 2023. "Challenges for ATM management in times of market variability caused by the COVID-19 pandemic crisi," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 31(2), pages 445-465, June.
    15. Jacek Pietrucha, 2021. "Drivers of the Cash Paradox," Risks, MDPI, vol. 9(12), pages 1-17, December.

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